Q What’s a “dim sum bond” and why is it a big deal?
A “Dim sum bond” is the name given to a renminbi-denominated bond issued outside mainland China. Up to now, this has only happened in Hong Kong. The fact that it is now happening in London shows the degree to which Beijing is relaxing control over its currency.
Q Why has this happened now?
A It follows a series of steps in which China has loosened controls. The first was allowing renminbi to be transferred in and out of non-Chinese bank accounts, letting an offshore market develop. Alongside that, Beijing has raised the quotas limiting the movement of capital in and out of China and abolished many restrictions on exporters.
Q What now?
A Demand will grow alongside trade as banks set up the necessary infrastrcture.